Trading Plan for 7/23

If Friday’s late high was bullish… then it should have extended higher Monday. That is, trying to extend it higher should have gained traction. Not trying to extend higher would not have undermined Friday’s rally effort. But Monday did try to extend higher, and the effort failed, which is not bullish.

Pattern points… (Setups and technicals)[pay]
Friday’s 1687.50/1689.50 cash session and futures closes would not let trending get away from its zone Monday. Probing above it overnight to 1694.25 was retraced back into the zone. Its reaction up to 1693.00 was reversed back under the zone. And that was all before the open.

The morning’s bounce up to 1693.00 was reversed back into the 1687.50/1689.50 zone, as was a shallower afternoon bounce. Just as sure as the zone was to attract price back to it, its support held. And held. And held.

The zone also contains last Wednesday’s 1688.50 prior high. Repeatedly probing above it Monday failed to launch a new rally leg. That “ineffectual optimism” is not itself bearish, but probably shouldn’t try extending higher before a corrective dip can refuel buyers.

[/pay]What’s Next… (Outlook and opportunities)[pay]
Extending higher without first correcting Tuesday would likely expend buying pressure upon testing the 1694.25 “new Globex trend extreme,” probably at least up to 1696.00. Back under 1687.50 would trigger at least a corrective dip. [/pay]

Look for at least one update overnight or ahead of the Morning Market Tour… My thoughts on the day’s econ calendar are linked here.